Video battleground may be up in the air – wireless cable companies
Two Bell regional holding companies have made a somewhat unconventional strategic move in the video battle – they have decided to attack by air.
Bell Atlantic and Nynex recently made a joint investment of $100 million in CAI Wireless Systems Inc., a wireless cable company based in Albany, N.Y. With the investment, the RHCs gain the right to use the distribution systems of CAI to offer their own video programming.
For the telephone companies, the investment in CAI is a way to begin offering video services immediately while they continue the long and costly process of upgrading their own networks to provide video and interactive services. The CAI deal gives the RHCs a foothold in an area where few other telephone carriers have yet to tread.
“This is part of a strategy to gain early market entry – to use their spectrum in our key markets to get our programming to more people quickly,” said a spokesman for Nynex.
CAI Wireless refused to comment on the investment, and deferred all questions about the wireless cable industry to the Wireless Cable Association in Washington, D.C.
According to the association, wireless cable involves beaming programming from satellites to receiving/transmitting stations, where the signal is converted to microwave frequency and broadcast in the 2.5- to 2.7-GHz band to customer locations up to 40 miles away [ILLUSTRATION FOR DIAGRAM OMITTED].
At the customer premises, the signal is received by a line-of-site rooftop antenna, which converts the transmission to a TV signal. That fully-addressable signal travels to a set-top decoder to be descrambled.
CAI uses multichannel multipoint distribution service (MMDS) technology, which is currently analog. CAI and other wireless cable providers plan to develop and deploy digital transmission and compression as early as next year, according to the Wireless Cable Association. Analog MMDS can provide up to 33 channels; digital technology would allow delivery of more than 100 channels.
Bell Atlantic initially showed an interest in wireless cable when it invested in CellularVision of New York (Telephony, Aug. 9, 1993, page 9), which uses local multipoint distribution service (LMDS) to transmit video in the 28-GHz band. Whereas MMDS delivers signals from one antenna, CellularVision’s system delivers signals to window antennas via cell sites that each cover up to a six-mile radius.
But regulatory issues regarding the 28-GHz band and technological difficulties surrounding LMDS may have dampened Bell Atlantic’s hopes to enter the video market by that road.
“CellularVision was going to aggressively build out its video systems in the New York region,” said Peter Krasilovsky, senior analyst at Arlen Communications Inc., Bethesda, Md. “But the 28-GHz technology remains unproven, and there’s also a tremendous battle over that spectrum. By making the CAI investment, Bell Atlantic may be pointing in another direction,” he said.
CellularVision retorted by saying problems with LMDS are fixed, and that the spectrum battle can be solved with a co-sharing agreement with fixed satellite service providers. The company has contracted Bellcore for a feasibility study on co-sharing, said Shant Hovnanian, CEO of CellularVision.
Bell Atlantic and Nynex are interested in wireless cable mainly because of its promised migration to digital transmission.
“As [wireless cable] moves to digital you’re talking about high-quality digital video and audio that is really on par with [direct broadcast satellite],” said the Nynex spokesman.
The deal with CAI creates a new role for Nynex and Bell Atlantic as providers of programming rather than network operators.
That programming, the Nynex spokesman said, will be “standard cable fare,” similar to what traditional cable TV carriers are currently offering.
“We’re talking about local broadcast – which is something that MMDS can offer that’s not available on DBS – as well as basic and premium channels,” he said.
For the telcos, wireless cable most likely will not be used to provide interactive services, he added. “Broadband systems will be the way to go in terms of providing interactivity down the road, but right now this technology offers advantages such as pay-per-view service and it has a lot of promise,” the Nynex spokesman said.
That raises the question of how long the Bell Atlantic/Nynex/CAI relationship will last once the RHCs have their broadband networks up and running. According to Bell Atlantic, wireless cable may serve only as a temporary solution to providing video service.
“As our own network modernizes, we will migrate customers from MMDS to the full-service network,” said the Bell Atlantic spokesman.
But Krasilovsky questions the need for full-blown, full-service networks, pointing to the wireless cable alternative as a viable long-term solution for video delivery.
“It’s unclear what the demand is for full-service network programming,” he said. “They’re positioning wireless cable as an interim solution, but it may end up being the permanent solution in some areas.”
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